In an attempt to boost returns and increase portfolio diversification, many benefit plan sponsors are utilizing or considering positions in alternative investments, but may be unaware that many of these investments produce unrelated business taxable income that causes otherwise tax-exempt trusts to have to file tax returns, and potentially pay tax on some of their investment income. Both employee benefit plan sponsors and advisors should consider the expected additional investment return as well as the expected additional filing requirements and costs when making investment decisions.
We can help you prepare returns that completely and accurately reflect your activities to maximize transparency and minimize exposure to tax and penalties. We prepare over 1,800 Forms 990 and 990-T annually, as well as the related Forms 926, 8621, 8865, 8886, and 5471 that may be required depending on the plan’s investments.
Our team is well versed in both the federal and state issues necessary to meet your tax compliance needs, and ready to consult with you as other issues arise. Our experience with employee benefit plans and exempt organizations with portfolios totaling over $50 billion in assets and significant positions in alternative investments allows us to assist you in identifying investments that cause additional reporting requirements. We can also assist you with analyzing Schedule K-1 data from limited partnership investments and preparing or reviewing the resulting federal and state tax filings. Moreover, we draw on the expertise of our international tax and state and local tax teams for consultation on specialized tax issues arising from these investments.
Our team members participate in monthly updates to ensure that they’re current with recent developments, and also attend internal and external training sessions on exempt organization and trust tax issues.